Marketing the Kindle

I am a big fan of Amazon’s Kindle. And I definitely believe that the future of ePublishing is a bright and interesting one. Lately I am trying to conceptualize the first relevant Kindle marketing application for some of our clients but this initiative will be addressed in another post. This post describes an interesting encounter I had this week.

On a flight back from New York on Tuesday this week I was sitting next to a well dressed business person. We started talking; he was clearly an articulate and smart professional, working for a large consulting company. We discussed all the benefits of traveling with a Kindle, the version differences between the Kindle 1.0 and 2.0, and more Kindle related small talk. After a while we both took out our Kindles and started reading. Normally I like to know what people are reading, it might trigger a question and a renewed conversation. And it always adds to the character of a person that you are sitting next to.

But it is impossible to do this character-book association game with the Kindle, so I just asked politely what he was reading. He replied that he was immersed in Laurence Lessig’s last book (Lessig is one of the smartest open source thinker around), since he was interested in the limitation and disadvantages of copyright legislation. I expressed my admiration for Lessig and we continued reading both our Kindles. After a while he got up to go to the bathroom but he left his Kindle on his tray, facing my seat. Just looking at the open page on his Kindle, and reading a few sentences, it was easy to decipher that this was not one of Lessig’s book but a book about adolescent vampires and their challenging love lives (most likely one of the Twilight series). When he returned to his seat I was polite enough not to start a conversation about the challenges of blood thirsty vampires in sun trenched places like Arizona.

This episode triggered a brief research project over the last days. I was looking for differences in genre and “sophistication” of physically versus electronically sold books at Amazon. My hypothesis is that people feel freer to buy more books that don’t have any social currency value when they can buy a book electronically versus buying it in its physical form. The Kindle killed the signaling effect of intellectually challenging books, so quite a few people might think that they don’t have to pretend anymore. Unfortunately I was not able to get quantitative data validating or refuting my hypothesis but a brief survey in a circle of friends and colleagues confirmed my thinking. It is less about reading fewer intellectually challenging books but more about buying and enjoying books that have less perceived social value.

I will not claim that the Kindle is a culture destroying device, it rather spurred me to a new marketing idea that Amazon could use: “Kindle – Only you know what you are reading”. It could give a big boost for trashy novels of all genres.

Marketing in South Africa

Spending a few days in Johannesburg, South Africa, this week, I was intrigued by three core observations that I was able to make, mostly through discussions with brand marketers, advertising colleagues, and trade journalists:

• The quality of the strategic thinking of the senior marketers that I met parallels the top marketing countries in the world. South Africa can be proud of having outstanding strategic thinkers in its marketing communities. The key hurdles of elevating the sophistication of the marketing discourse even further in the right direction seem to be twofold: The lack of trusted and cost-efficient accessible marketing data and insufficient and reliable Internet bandwidth. Both issues should be addressed by the countries leading marketing organizations, since a lack of improvement could seriously hamper South Africa’s currently advanced place as a top marketing leader.
• The lack of sufficient and consistently strong Internet bandwidth hampers quite a few marketing innovations. Using the Internet in South Africa reminded me of 2002 or 2003 in North America due to its slow Internet connection. One, used to today’s high Broadband penetration in North America and Europe, easily forgets how dramatically different the Internet usage with slow speed is. The government spends rightfully quite a lot of investments on physical roads in preparation of the 2010 Soccer World cup. But one needs to ask if there is sufficient investment into Internet bandwidth. Should the government spend an available $100 million for an additional road or for extended Internet bandwidth? There are quite a few good arguments that Internet connections could provide a better investment choice to increase the wealth of a nation and spur development for the underprivileged than an incremental physical road.
• South Africa could become a great test market for piloting and prototyping brands and product solutions for a market that has two highly diverse income segments: 20% of the population as part of the upper middle class with a good income base and the rest of the population with a significantly lower income level, any strong and large middle class is lacking. South Africa has roughly 45-50 million inhabitants with less than 5 million taxpayers. It has a similar population structure as China or India but on a much smaller scale. The challenges of successfully promoting a brand with the need for such a significant brand stretch could be well experimented and piloted in South Africa with all the key results extrapolated to some of the largest nations of the world.

South Africa seems to sometimes struggle with finding its identity within the global marketing community, but there is much to be proud of and more opportunities than most believe. South Africa remains a fascinating creatively talented and increasingly strategic deep marketing community that should be on the radar of every curious marketer. It’s not just the upcoming 2010 World Cup that should motivate a visit.

Monetizing Data Intelligence

We always knew that Credit Card Companies were very sophisticated in utilizing consumer data to be smart in new card member acquisition and monetizing them as ongoing members. But even I was surprised to read in the latest Fortune magazine that Ken Chenault, CEO of American Express, mentioned the utilization of card member data as one of their most promising revenue streams in the near future:

“Another area that we feel strongly about is that we have information we can use in very effective ways for a range of partners. So, for example, what might be surprising is that the Darden restaurant (Red Lobster, Olive Garden, LongHorn Steakhouse, and other brands) relies on us to help with site selection for its restaurants. We believe that our information, which h we use in our own business and marketing, can be used by retailers, restaurateurs, and other corporations to improve their business, and that’s an increasing focus for us.”

Most interesting is that companies like Amex are not just utilizing their own data to improve their own business but that they are more and more experimenting in building an incremental revenue source. Over the next few years, most companies with data volume that is representative enough to draw meaningful conclusions will attempt to monetize their data intelligence.

Data Intelligence becomes a vehicle for revenue growth by selling smart intelligence to other parties. Quite a few retailers tried to pursue a similar path by packaging intelligence from their frequent shopper programs and attempting to sell it to manufacturers. There are some success stories (e.g. Tesco), and some stories of failure with such an approach (e.g. Safeway). The three most likely industries to pursue such a path are:

• Retailers (selling intelligence to manufacturers)
• Financial players (selling intelligence to card issuers and merchants)
• Travel companies (selling intelligence to non- competitive travel partners).

Everyone playing in this field of building an incremental revenue stream by utilizing proprietary consumer data will be smart in analyzing the up- and downsides of such a move. A retailer might be more interested in leveraging consumer intelligence in attracting incremental trade dollars from the manufactures instead of attempting to sell data driven marketing programs. The pay-back could be much larger.

Strategic vacuum

Following over the last months in more detail what large marketing agencies and service providers are communicating as their longer term strategy, I am more and more astonished by the apparent vacuum for longer term strategies and plans. It seems that the global recession further increased the obsessive short term focus of marketing organizations. My best guestimate based on discussions within the industry and reading through published material is that close to 90% of marketing agencies and service providers don’t have a meaningful and integrated vision, strategy, and execution focus with a time horizon of three to five years.

It seems that the exclusive focus of marketing agencies in today’s difficult economic times are only twofold:

• Meet and satisfy needs and demands of existing clients
• Win new clients at any prize.

Any other critical elements for longer term success, like talent recruiting and development or the development of proprietary intellectual ideas, products, or methodologies that are scalable, are totally neglected.

I come to believe stronger than ever before that only the outline of a simple but powerful company strategy answering a few critical questions can ensure that a marketing firm is not only satisfying current daily client needs but works on building an organization with true future potential. My short list includes

1. What is happening in the market you are trying to serve (Revenue developments by market and marketing functions; key client and market trends)?

2. What is the brutally honest assessment of your own marketing organization (SWOT-Analysis, Revenue and Profit trends, top market growth areas versus own ability to monetize them)?

3. What is the purpose and vision of your company for the next three to five years?

4. What are the key strategic bets that your organization will focus on?

5. How is the execution of the strategy ensured, monitored, and improved?

The 90% of marketing firms who are not answering these questions will be very likely in significant trouble. Only focusing on servicing and winning clients is not sufficient for long term success, it is just green fees to participate in the market place. And clients who are contemplating the strength of their current agency partners should ask the executive management of their partners to present their answers to these five questions. Their answers is significantly more important and a better indicator of future success of their partnership than the creative quality of one online banner or the music selection in one TV commercial.

Unfortunately a lot of clients focus on minor creative execution elements of their agency partners instead of inquiring about their partner’s ability to position their organization for long-term success through a simple and meaningful strategy.

Reinvented TV commercials

The whole discussion about the death of TV commercials is missing several points. First, looking at any of the media research companies predictions for the next three to five years, one will realize that total TV viewership will slightly increase in North America (and even more globally), especially amongst young people. Second, TV viewership is shifting from the four networks to cable and from live to time-shifted. But even the time shifted total TV viewer hours will not be more than 20% of total viewing behavior in three to five years. Third, TV commercials will find more distribution channels than just the TV screen in the living room. A longer version can find its way on any of the Online video channels, or a modified version can be placed on any of the mobile applications, etc. TV commercials will not have just one format but multiple with channel specific versions and interpretations.

But the wrongly proclaimed decline of TV should not hinder marketers to entertain serious discussions about the changed role and design of most TV commercials. I predict a few major shifts of how TV commercial are designed and utilized:

• More and more TV commercials will play on the humors side of communication, since it will promise a higher breakthrough rate than most other forms of 30 seconds entertainment. Commercials will be more entertainment oriented, since consumers can shift and ignore them as never before.
• TV commercials will stronger embrace a smart communication of product benefits. A good example is the TV commercials for the iPhone applications versus the majority of all car commercials that shows a car driving on a street, either at night in a cool urban setting or during a beautiful day on the countryside.
• TV commercials will become more “Call to Action” oriented. It is not at all about the traditional “Direct Response TV” make-up but rather about a clear drive for a particular action. This action will go beyond the call to visit a website or calling a particular phone number, it can entail a requested social behavior, a request to submit an idea, etc.
• Any TV commercial will be more a brand and product film that gets transformed into a TV commercial, a Mobile phone spot, a Web spot, etc. The essence of it will be the same but its artistic and commercial application vastly different depending on the particular channel.

TV commercials are not dying but their structure will change dramatically over the next few years. The first ever commercial aired in 1941, and it will live on for much longer than most of us expect.

The rise of the "Prosumer"

The term “Prosumer” was first mentioned (or created) in 1980 by Alvin Toffler in his book “The Third Wave”, describing the phenomena that consumers are not just merely consumers but becoming producers, too. Tapscott and Williams picked up this concept in their recent book “Wikinomics” and expanded its usage to include a growing numbers of consumers who are enabled to become producers, all driven by technologies that facilitate the cost efficient exchange of information, the mass-production of personalized products and services, and the immediate contribution and improvement in any kind of open source projects.

It seems to me that brands and their underlying business models are falling into three different categories of dealing and interacting with the “Prosumer” concept:

• Brands like Wikipedia or Firefox that can only exist through Prosumers. Their whole business model relies on the contribution of consumers.
• Brands like Lego, Haagen-Dazs or Addidas who allow the incorporation of Prosumers behavior in two ways: either as contribution to their own product design and creation process (e.g. Haagen Dazs’ ice cream flavor competition) or as the opportunity to personalize their own version of the brand’s product (e.g. Addidas customized shoes).
• Brands like Pepsi or Frito-Lay that open up very slightly their brand control to allow consumers to create TV spots or naming rights, all rather on the fringe of their brand experience.

This third group of brands is definitely the vast majority. One could argue that these brands don’t really embrace the concept of “Prosumers” but merely pretend to take them serious by allowing them to influence non-core elements of their brand experience.

My prediction is that the rise of the Prosumer will continue and influence a larger percentage of a company marketing activity. But there will be always a large role for brands which apply strong control and an iron fist in designing its brand experience (e.g. Apple). They might allow the Prosumer to play in a well limited way but the core of its brand experience will be centrally defined and designed.

Any marketer needs to find the right long-term path within these three different strategic options of integrating strongly or lightly the Prosumer, all in alignment of what makes a particular brand successful. But no brand can ignore the Prosumer anymore.

Under- and Over-theorized

Reading a quote from the very likely next prime minister of Canada, Michael Ignatieff, reminds me of a dilemma that most marketing executives are not able to escape: Ignatieff says that his transition from intellectual professor and writer to a politician fighting for majorities included a very important element of moving to a state of being “Under-theorized”. He is expressing the belief that a politician needs less critically reflected and elaborated theories but rather a drive for faster decisive actions that are less theory bound. He says that his current political career is more about “you have got to show fight” than the ability for deep pensive intellectual concepts.

Executive marketers, at least the good ones, are continuously oscillating back and forth between the stages of “Under-theorized” and “Over-theorized”, always mindful of the dangers of both zones. It is extremely difficult to remain in the right space of “right-theorized”.

Unfortunately I believe that the majority of executive marketers are constantly in the zone of “Under-theorized”. There is a profound lack of theoretical foundations that can be the guidepost of marketing decisions, giving marketers and marketing organizations a framework in which it can act and breathe without constant micro-management.

Some of the most recent relevant theories that executive marketers should attempt to dive into are:

• Behavioral economics: The theory and science of understanding of how human beings are making decisions as not purely rational driven individuals. Human beings never act purely rational, the border zone between rational and emotional decision drivers is much murkier than most theories assume.
• Brand engagement theories in a Digital world: The purchase and engagement paths of today’s consumer are getting more and more difficult to understand without a clear foundation of how they interact within their individual and fragmented worlds. Every brand needs a theoretical foundation of how consumers are making purchase, usage, and advocacy decisions in its particular category.
• Integrated Marketing: The understanding of how different media channels, moments, and messages work together to achieve a particular marketing goal is getting more and more critical and complex to understand, shape, and predict.

Maybe the character of being “right-theorized” could become an additional requirement of being a successful senior marketing executive in any organization.